In a move to clean up its balance sheet, Galactic Resources (TSE) has entered into an option agreement to sell its 48% interest in the Ridgeway open pit gold mine in South Carolina to Placer Dome (TSE).
The deal is subject to a right of first refusal held by Kennecott, the owner of the other 52% of the Ridgeway mine, plus a due diligence review and board approval by Placer.
Consideration for the interest is US$18 million in cash and Placer has agreed to advance US$3 million of the funds as a loan pending closure of the transaction.
Placer will also assume about US$21 million in long-term debt associated with the mine.
With long-term debt totalling about US$61 million at the end of August, the sale would decrease Galactic’s long-term debt to about US$41 million. The company states it will utilize the cash proceeds from the sale to eliminate all long-term debt and take advantage of asset acquisitions in base as well as precious metals.
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